Daily Murmur 13/01/11

 I was a little concerned about the sluggish nature of our market recently but know I am adamant we will have one last push in to Mid February.   Feb 21 would be the ideal time set up for a peak and after reviewing resources and the commodity index.

What is certain to me is that the commodities is a major bubble that will burst soon, as this momentum is just so vertical.  It is not a matter of if but a matter of when in my opinion.  Having a look at shorter time cycles I saw a potential bullish set up yesterday which calls for an exhaustion into mid February window.  This suits our longer 60 year cycle which had a last leg that lasted almost two years in duration.  The last leg started in late Feb/ early march 2009 for most commodities so this timing is ideal based on this cycle.
 
The thing bothering me the most in the past few days is that the market did not look like a top.  It hasn't traded into what a normal exhaustive high would look like and the move down for the past few weeks is not how you trade if you are coming off a major top.  Have a look at RIO, probably the strongest large cap stock on the index for the last two years.  This needs to exhaust in a stronger manner to mark a proper high, so I think it's yet to happen.

I have looked into my short term cycles and discovered a very aggressive set up which suggests based on previous examples that we could accelerate higher and Feb 21 would be the perfect set up for an aggressive blow off in these commodity index and commodity stocks.  I think we finally have the right set up for a final high in commodities.
 
I would stay away from gold as this looks very weak but I think the RIO and WSA are two that can accelerate here.  Even FMG which I think will have a disasterous year in 2012 can have a short term rally here first.